Bank of America, like many of the major banks rely on interest rates for approximately half of their income. The rate hike in December will provide some respite after a period of persistently low interest rates. The bank also relies on trading income and in a recent conference, the CEO Brian Moynihan, stated that sales and trading income for the fixed income division was set to rise 15% year-on-year. The rise is partly attributed to the volatility created by the election of Donald Trump in November. Total sales and trading revenue hit $2.4 billion last year and reached $3.6 billion in the third quarter of 2016. However, trading incomes tend to be lower in the fourth quarter. The dividend was raised by 50% in the third quarter, as the first raise since 2014, as a result of the bank clearing the Federal Reserves’ stress tests. Bank of America has a consensus price target of $21.69 indicating the bank is trading at 6% premium to fair value.
- Earnings for the fourth quarter of 2016 are estimated to rise by 41% from $0.27 per share to $0.38 per share.
- The company has received 6 earnings upgrades in the last 30 days.
- Revenue for the quarter rose to $20.99 billion compared with $19.56 billion in revenue for the previous year.
- During the three months ending December, the share price rose by approximately 42%.